Record Gross Sales Revenue of $352.5 million, Net Earnings of $60.4 million ($0.20 per share),
Cash Flow from Operating Activities of $86.4 million
(All amounts in US$ unless otherwise specified)
VANCOUVER, March 14, 2012 /CNW/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the year ended December 31, 2011. Net earnings for the year were $60.4 million and cash flow from operating activities was $86.4 million. Net earnings for the fourth quarter were $4.9 million and cash flow from operating activities was $11.1 million. Capstone ended the year with cash on hand of $486.3 million. Copper production for the year at Capstone's two mines, Cozamin and Minto, totalled 78.3 million pounds of copper in concentrates (75.5 million pounds of payable copper) at an estimated total cash cost1 of $1.45 per payable pound.
Capstone will hold a conference call Thursday, March 15, 2012 at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's year end 2011 consolidated financial statements and management's discussion and analysis ("MD&A") which are available on Capstone's website at:
http://capstonemining.com/s/Financial_Statements.asp. An updated corporate presentation, including results to December 31, 2011, will also be available at http://capstonemining.com/s/Presentation.asp.
| Three Months Ended
| Year Ended
|Gross sales revenue ($ millions)||65.6||52.7||352.5||301.3|
|Copper in concentrates produced (millions lbs)||19.8||18.9||78.3||76.0|
|Payable copper produced (millions lbs)||19.0||18.6||75.5||73.0|
|Total cash cost per payable pound of copper produced (1) ($)||1.50||1.66||1.45||1.40|
|Copper sold - (millions lbs)||16.5||10.8||79.1||72.8|
|Net earnings ($ millions)||4.9||8.5||60.4||74.6|
|Earnings per common share ($)||0.01||0.04||0.20||0.37|
|Adjusted net earnings (1) ($ millions)||4.2||(3.5)||52.2||45.2|
|Adjusted net earnings (1) per common share ($)||0.01||(0.02)||0.18||0.23|
|Cash flow from operating activities ($ millions)||11.1||22.6||86.4||86.3|
|Cash flow from operating activities per common share ($)||0.03||0.11||0.29||0.43|
|Cash, restricted cash & short-term deposits ($ millions)||486.3||192.4|
"Capstone delivered robust financial results again in 2011, with record revenue and continuing strong cash flow," said Darren Pylot, President and CEO of Capstone Mining Corp. "This past year has been a transformational one for Capstone with the purchase of the Santo Domingo copper-iron-gold project in Chile, which is the cornerstone growth asset for the company. With our cash balance and long term strategic partnership with Korea Resources to develop Santo Domingo, Capstone has all of the expected equity to advance both of our development projects, Santo Domingo and Kutcho."
"We once again increased reserves and resources at both of our operating mines, with continual extensions of mine life providing us with steady production well into the future," continued Mr. Pylot. "We made a ninth discovery at Minto in 2011, and exploration is continuing at Cozamin, where the Mala Noche Footwall Zone remains open."
Financial and Production Highlights for the Year Ended December 31, 2011
- Net earnings of $60.4 million or $0.20 per common share which included:
- Earnings from mining operations of $113.2 million,
- Realized copper price of $3.84 per pound.
- Gains on disposal of investments of $1.5 million,
- Net gain of $8.5 million on derivative instruments, and
- $39.6 million in current and future tax expenses.
- Adjusted net earnings1 were $52.2 million or $0.18 per common share after making adjustments for certain non-cash and non-recurring items.
- Cash flow from operating activities of $86.4 million or $0.29 per common share.
- Produced a total of 75.5 million pounds of payable copper at an estimated total cash cost1 of $1.45 per pound of payable copper.
- Gross sales revenue of $352.5 million on the sale of 79.1 million pounds of copper, 13.6 million pounds of zinc, 3.7 million pounds of lead, 22,258 ounces of gold and 1,529,823 ounces of silver.
- Working capital increased to $533.1 million at December 31, 2011 (which included $486.3 million of cash) from $177.0 million at December 31, 2010.
Financial Highlights for the Three Months Ended December 31, 2011
- Net earnings of $4.9 million or $0.01 per common share which included:
- Earnings from mining operations of $19.3 million, partially offset by general and administrative expenses of $3.9 million, share-based compensation of $1.3 million, a loss on foreign exchange of $4.7 million and current and deferred income taxes of $6.4 million.
- Adjusted net earnings1 were $4.2 million or $0.01 per common share after making adjustments for certain non-cash and non-recurring items.
- Cash flow from operating activities of $11.1 million or $0.03 per common share.
- Produced a total of 19.0 million pounds of payable copper at an estimated total cash cost1 of $1.50 per pound of payable copper.
- Gross sales revenue of $65.6 million on the sale of 16.5 million pounds of copper, 2.6 million pounds of zinc, 1.2 million pounds of lead, 4,000 ounces of gold and 422,000 ounces of silver.
- Completed the acquisition of Far West Mining Ltd. ("FWM") by way of a plan of arrangement in June 2011. FWM is the 100% owner of the large scale copper-iron-gold development project Santo Domingo located in Region III, Chile.
- Entered into a long-term strategic partnership with Korea Resources Corporation ("KORES") whereby KORES acquired a 30% interest in FWM for a cash consideration of $194.2 million. KORES will arrange for debt financing of 65% of the bankable feasibility study capital costs of Santo Domingo and will have the obligation to purchase 50% of the copper and iron concentrate production from Santo Domingo at prevailing market terms.
- Completed a private placement with KORES by issuing 40,198,632 common shares for gross proceeds of $178.0 million.
Cozamin Mine, Mexico
- Produced 39.7 million pounds of payable copper at a total cash cost1 of $1.27 per pound.
- Exceeded 3,000 tonnes per day of throughput for 2011, the highest annual mining rate achieved to date with the final three quarters of the year achieving both record throughput and mining rates.
- Completed 930 metres of development drifting on the Mala Noche Footwall Zone ("MNFWZ"), mining 61,698 tonnes of development ore an average grade of 2% copper for the year.
- Added 103 million pounds of measured and indicated copper mineral resources and 147 million pounds of inferred copper mineral resources on a mineral resources estimate completed on the MNFWZ based on the 2011 drilling. Measured and indicated mineral resources total 419.3 million pounds of copper (see news releases dated June 20, 2011 and February 8, 2012).
- Initiated engineering studies and mine planning work based on the new mineral resource estimate aimed at incorporating the MNFWZ mineral resource into the Cozamin reserves.
Minto Mine, Yukon
- Produced 35.9 million pounds of payable copper at a total cash cost1 of $1.64 per pound.
- Achieved record mill throughput in 2011, achieving an average annual throughput of 3,447 tonnes per day.
- Completed mining of the Minto Main Pit and commenced stripping the Area 2 deposit. Ore release from Area 2 is scheduled to begin in the second quarter of 2012.
- Increased the measured and indicated mineral resources to over 1.1 billion pounds copper with completion of an updated mineral resource estimate incorporating drilling results from the Copper Keel/Wildfire area and linking it with Area 2/118 (see news releases date May 30, 2011 and February 2, 2012).
- Completed the Phase V preliminary feasibility study ("PFS"), extending the Minto Mine life to 2020, at an average annual production of 43.0 million pounds of copper in concentrates, at a total cost per pound of payable copper of $1.34, net of by-product credits.
- Identified a ninth new discovery at Minto named Fireweed.
Santo Domingo Project, Chile
- Completed the Santo Domingo PFS in August, which indicates an after-tax net present value of $1.1 billion at an 8% discount rate with a three year payback of capital.
- Recruited the core management team for the project.
- Awarded the contract for the preparation of the Santo Domingo project environmental impact study ("EIS") to Knight Piésold. The EIS is scheduled to be filed before the end of 2012.
- Awarded the contract for the preparation of the feasibility study ( "FS") and basic engineering to AMEC, with NCL Ingeniería y Construcción Ltd. providing the mining section of the FS. The FS is scheduled for completion in the first quarter of 2013.
- Initiated two separate drill programs in October 2011; a geotechnical drilling program in support of a FS and an in-fill mineral resource drilling program targeting the proposed open pit during the payback period identified in the PFS.
Kutcho Project, British Columbia
- The focus at Kutcho is on permitting activities. In 2011, the B.C. Environmental Assessment Office completed its determination of affected First Nations and published the project description on its website. The pre-application process is ongoing.
Capstone forecasts that 2012 production will be 80 million pounds (±5%) of contained copper at a total cash cost1 per pound of payable copper of $1.55 to $1.65. At Cozamin, production in 2012 is expected to be slightly higher than 2011 as the mine is expected to run at the sustained levels of the last three quarters of 2011. At Minto, production for the first four months of the year will rely on low-grade stockpiles as stripping continues in Area 2/118. Ore from Area 2/118 will begin to feed the mill starting in the second quarter of 2012, with grades gradually increasing through the remainder of the year. Engineering work is underway at both mines with the goal of converting further resources into the reserve category.
Conference Call Details
Capstone will host a conference call on Thursday, March 15, 2012 to discuss these results. The conference call and webcast details are as follows:
|Date:||Thursday, March 15, 2012|
|Time:||11:30 am Eastern Time (8:30 am Pacific Time)|
|Dial in:||North America - 1.888.231.8191, International - 1.647.427.7450|
|Replay:||North America - 1.855.859.2056, International - 1.416.849.0833|
|Replay Pass code: 42642132|
The conference call replay will be available until March 29, 2012. A transcript of the call will also be made available on Capstone's website (http://capstonemining.com/s/Conference_Calls.asp) within approximately 24 hours of the call.
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian mining company with two producing copper mines, the Cozamin copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the Minto copper-gold-silver mine in Yukon, Canada. In addition, Capstone has two development projects, the large scale 70% owned Santo Domingo copper-iron-gold project in Chile in partnership with Korea Resources Corporation and the 100% owned Kutcho copper-zinc-gold-silver project in British Columbia, as well as exploration at properties in Chile, British Columbia and Australia. Using its cash flow and strong balance sheet as a springboard, Capstone aims to grow organically through continued mineral resource and reserve expansions and through acquisitions in politically stable, mining-friendly regions. Capstone is included in the S&P/TSX Composite Index and S&P/TSX Global Mining Index. Additional information is available at www.capstonemining.com.
Cautionary Note Regarding Forward-Looking Information
This document may contain "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). These forward-looking statements are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required under applicable securities legislation.
Forward-looking statements relate to future events or future performance and reflect Company management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "outlook", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. In this document, certain forward-looking statements are identified by words including "may", "future", "expected", "intends" and "estimates". By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review under the Company's profile on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements.
National Instrument 43-101 Compliance
Unless otherwise indicated, Capstone has prepared the technical information in this news release ("Technical Information") based on information contained in the technical reports, news releases and MD&A's (collectively the "Disclosure Documents") available under Capstone Mining Corp.'s company profile on SEDAR at www.sedar.com. Each Disclosure Document was prepared by or under the supervision of a qualified person (a "Qualified Person") as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101"). Readers are encouraged to review the full text of the Disclosure Documents which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents.
The disclosure of the technical information contained in this news release has been reviewed and approved by John Sagman, P. Eng., Capstone's Vice President, Technical Services (technical information related to mining and production) and Brad Mercer, P. Geol., Capstone's Vice President, Exploration (technical information related to mineral exploration activities), both Qualified Persons under NI 43-101. In addition, Gregg Bush, Senior Vice President and Chief Operating Officer for Capstone, reviewed all technical information in this news release.
Alternative Performance Measures
The items marked with a "1" are alternative performance measures and readers should refer to Alternative Performance Measures in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2011 as filed on SEDAR and as available on the Company's website for further details.
1The items marked with a "1" are alternative performance measures; please see "Alternative Performance Measures" at the end of this release.
For further information: